July 31 (Bloomberg) -- West Texas Intermediate headed for
its strongest month since August on signs of shrinking crude
stockpiles and better-than-expected growth in the U.S., the
world’s biggest oil-consuming country.

Futures gained as much as 0.7 percent and have advanced 7
percent this month. Gross domestic product rose at a 1.7 percent
annualized rate after a 1.1 percent gain the prior quarter,
Commerce Department figures showed today. A U.S. government
report is forecast to show crude supplies slid by 2.45 million
barrels last week, according to a Bloomberg survey of analysts.
Brent fell to its lowest level in more than three weeks as Sudan
was said to postpone a plan to halt oil exports.

“U.S. refinery activity is very high, which can explain
the continued decline in crude stocks,” said Carsten Fritsch,
an analyst at Commerzbank AG in Frankfurt. “But fuel demand is
still lackluster, which means fuel stocks are still quite high
and have risen of late.”

WTI for September delivery rose as much as 75 cents to
$103.83 a barrel in electronic trading on the New York
Mercantile Exchange and was at $103.23 as of 9:17 a.m. The
volume of all futures traded was 19 percent below the 100-day
average. The contract fell $1.47 yesterday, dropping the most
since July 24 and closing at the lowest level since July 3.

Fuel Stockpiles

Brent for September settlement fell as much as 90 cents to
$106.01 a barrel on the London-based ICE Futures Europe
exchange, its lowest level since July 5. The European benchmark
was at a premium of $2.78 to WTI, compared with $3.83 yesterday.

South Sudan stopped shutting its oilwells after neighboring
Sudan postponed a plan to block exports, signaling production of
its low-sulfur crude that’s prized by Japanese buyers will
continue for at least three more weeks.

“We will instruct the oil companies operating in South
Sudan not to shut down as scheduled,” Nicodemus Ajak Bior, a
spokesman for South Sudan’s Petroleum Ministry, said in a phone
interview yesterday from Juba, the capital.

The American Petroleum Institute said yesterday that
stockpiles decreased by 740,000 barrels last week and that
gasoline supplies increased by 1.8 million barrels. A report
today from the Energy Information Administration, the Energy
Department’s statistical unit, will probably show gasoline
stockpiles declined by 1.5 million barrels, according to the
median estimate of 12 analysts in the Bloomberg survey.

Inventory Data

Distillate inventories, a category that includes heating
oil and diesel, decreased by 497,000 barrels last week, the API
said. They are projected to increase by 450,000 barrels in the
EIA report, due for release at 10:30 a.m. in Washington,
according to the survey.

The API in Washington collects information on a voluntary
basis from operators of refineries, bulk terminals and
pipelines. The government requires that reports be filed with
the EIA for its weekly survey.